THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

WOLF BLITZER, CNN ANCHOR: And breaking news in this country -- a missing governor returns with a stunning explanation for his absence and a tearful apology.

Where has -- where has Governor Mark Sanford of South Carolina been and what has he been doing?

And transportation experts sound the alarm after Washington's deadly Metro crash. They say aging systems are putting the lives of millions of Americans in danger right now.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

Let's get to our top story, the breaking news this hour -- new reports pouring out of Tehran of a violent confrontation between government security forces and demonstrators near the parliament building. And what we are hearing is very, very disturbing -- blood everywhere, people beaten like animals, women beaten madly and much more.

Our Internet reporter, Abbi Tatton, is monitoring all of this over at our Iran Desk at the CNN Global Headquarters in Atlanta -- Abbi, what are you hearing now?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, reports we have been getting in today are from this specific location. This is the Baharestan Square here in Central Tehran. It's the site of the parliament building -- a new site in terms of recent protests here.

And the videos we've been getting out of this area are shaky. They are really hard to make out. The video that I wanted to show you shows a group of protesters across the street, it appears. The person that's taking it seems to be some distance away from them, if you can make them out, across the street there.

This video was interesting to us because when it pans up later on, it appears to show a chopper -- a helicopter, overhead.

Witnesses gave accounts to CNN, talked about protesters driven away with clubs, shot at by security forces and a heavy police presence.

The Iranian news accounts are different. Press TV gave a very different report. The government funded station there in Iran acknowledged a protest in this locale today, said the protesters were dispersed by security forces and went on to say that heavy police presence prevented violence, Wolf -- something very different from what we've seen on social media and from eyewitness accounts coming in to CNN -- Wolf.

BLITZER: Abbi, we'll check back with you.

CNN has repeatedly invited the Iranian government to go on our air to answer questions about the events there. So far, the offers have gone unanswered. We continue to extend an open invitation to the Iranian government to share its perspective.

Here's a question, where is Mir Hossein Moussavi?

He's the top opposition leader. Government -- the government is believed to be targeting high profile opposition figures for harassment and arrest.

But what about Moussavi?

What's the latest as far as he's concerned?

We asked our Brian Todd to take a closer look -- Brian, what are you finding out?

BRIAN TODD, CNN CORRESPONDENT: Wolf, he has not been seen publicly for days and a pattern does seem to be emerging from Mir Hossein Moussavi to a group of well-known soccer players. High profile Iranians are increasingly under fire.

(BEGIN VIDEOTAPE)

TODD (voice-over): He's considered the face of the opposition. But Mir Hossein Moussavi's face hasn't actually been seen in public for several days and his Web site operates only sporadically.

An Iranian official says rumors that Moussavi is under house arrest or is about to be arrested are unwarranted.

TODD: Moussavi would have distinguished company. During this crisis, the regime has arrested several members of former President Hashemi Rafsanjani's family for taking part in opposition protests. They were soon released.

At least four members of Iran's soccer team were, "retired from the squad" after they wore green armbands during a game to protest the election results. The Iranian official tells CNN at least one of them was going to leave the team anyway on his own. But analysts say there's little doubt the government is targeting a who's who of dissenters -- a tactic not seen in decades.

SUZANNE MALONEY, SABAN CENTER FOR MIDDLE EAST POLICY: We haven't seen this sort of political excommunication since the earliest days of the civil war that raged in the aftermath of the revolution.

TODD: The strategy for the regime, analysts say, is obvious -- harassing the high profile could cut the reformist movement off at the head. Protesters could become more divided and directionless. But they say the tactic could also backfire in the other direction.

MALONEY: I think it would be quite possible that you would see more progress toward some of the coordinated actions that the opposition has talked about, including a general strike or targeting some of the economic infrastructures, such as the petroleum industry.

(END VIDEOTAPE)

TODD: Suzanne Maloney says, for that reason, Iran's leadership would probably try to prepare the ground before they would move to arrest Mir Hossein Moussavi. They'll try to cut deals, intimidate other elites from defecting to his side, she says, and make clear that the price of supporting him is a cutoff of access to power, alienation or worse, Wolf.

They may try to move on him, but they'll prepare the ground first before they do that.

BLITZER: Well, they seem to be moving on members of his family. And that's sending a very, very ominous note to a lot of folks over there.

TODD: We're talking specifically, actually, Rafsanjani's family. And that sends a very bold signal. Rafsanjani is one of the most powerful people in Iran. He could be the richest man in the country. And Con Coughlin, who's an author of several books on the -- on the region -- says the harassment of his family sends a very powerful signal that, you know, the regime, number one, is very confident that it can win this fight. And, number two, it's a signal from Khamenei to Rafsanjani -- you may be powerful, but I've got the real power here.

BLITZER: Yes. They're going...

TODD: That's right.

BLITZER: Going after members of Rafsanjani's family.

TODD: That's right.

BLITZER: But I've heard they're going after members of not only Moussavi's family, but other opposition figures, as well...

TODD: They are.

BLITZER: ...as a signal -- as a sign of what's going on.

TODD: They're rimming these people and sending very strong signals to them -- don't mess with us anymore or you have very serious and close consequences right near you.

BLITZER: All right. Thanks very much.

Brian Todd.

There's other breaking news that's happening right now not far away from Iran. A packed outdoor market in Baghdad the target of a deadly bombing attack today. At least 62 people were killed. The attack comes only days before U.S. troops are due to withdraw from all major Iraqi cities.

Let's go to Baghdad.

CNN's Michael Ware is back on the scene for us -- Michael, 60 odd people killed, more than 100 injured. A deadly clash -- a deadly bombing only days before U.S. troops are supposed to leave Baghdad.

MICHAEL WARE, CNN CORRESPONDENT: Yes, but, Wolf, this is just one of several. That's only a fragment of the picture.

I mean, despite the historic and tumultuous events happening just across the border in Iran, Iraq doesn't look like a war zone, it is a war zone. Women aren't being beaten in the streets here, they're being blown apart by the dozens.

Just a few hours ago, we had the bombing in the densely populated Shia neighborhood of Sadr City. A motor bike laden with explosives detonated in that marketplace at 7:00 p.m. when it's most packed with -- guess who -- women and children. Many among the 62 dead reported and the more than 150 wounded, we're being told by government officials, are women and children.

And this is just one of it. There was two other bombings here this evening -- much, much smaller.

But what I can tell you, in the past five days alone, Wolf, more than 180 Iraqi civilians have lost their lives in bombings and assassinations and other violent attacks.

All of this as the clock is ticking down -- six days left until the American-led war in Iraq comes to an end and the Iraqi war in Iraq begins. This is going to be a very tense time. A lot is hanging in the balance here in Iraq right now and it's all about happening in a public vacuum -- Wolf.

BLITZER: I know a lot of officials here in Washington, Michael, are really worried. June 30th is the deadline for U.S. military forces to leave major Iraqi cities and they're really worried that the violence is about to escalate.

WARE: Well, the Iraqi prime minister, Nuri Al-Maliki, has long been warning about a rising tide of violence leading up to June 30th. We're certainly seeing some evidence of that.

But I've got to tell you, these past five days have been bloody, but they haven't been extraordinary. We don't have the levels of violence we had a year or certainly two years ago. But the blood just doesn't stop flowing here.

Now, the extremists on both sides of the sectarian divide here still seem intent on provoking instability. Al Qaeda, on one hand, keeps repeatedly, almost endlessly attacking and slaughtering this Shia community, hoping to provoke a violent response and a return to civil war.

Meanwhile, you have Shia extremists who continue to fire missiles and rockets on the U.S. embassy and the seat of the Iraqi government power here.

Fortunately enough, most of the major players -- the great actors in this country, for now, are holding their fire. But this country is being held together by sticky tape. And as of next Tuesday, America can no longer wage the war it may want to here in this country.

Iraq, from that point on, has the whip hand and American troops can only enter Iraqi cities at the invitation of this government -- Wolf.

BLITZER: Michael, we'll be staying in close touch with you.

Good to know you're back in Baghdad for us.

As I always tell you, be careful over there.

Thank you, Michael Ware.

We're not going to ignore what's happening in Iraq, even as we continue to follow the breaking news in Iran. We won't ignore the war in Afghanistan, either.

Let's go to Jack Cafferty right now. He's got "The Cafferty File."

It's amazing. It's almost breathtaking to see what's happening in the world right now. And you can't ignore what North Korea says it's up to -- getting ready to launch some sort of missile around July 4th.

JACK CAFFERTY, CNN ANCHOR: It makes you wonder why anybody would want to be president of the United States.

Is Michael Ware any good?

BLITZER: Yes, he's pretty good. Yes.

CAFFERTY: Man. He's got it nailed down -- this country being held together by sticky tape. What a line.

All right. My favorite of the day, this clown from South Carolina, the governor, Mark Sanford, admitting he's been having an affair with a woman from Argentina, which is where he's been without telling anybody for the last week. Days of speculation on the whereabouts of the Republican governor ever since he went AWOL last Thursday.

Sanford's staff said Monday that he was hiking along the Appalachian Trail, where Sunday was nude hiker's day. That's where he told his staff he might be going -- the Appalachian Trail.

I wonder if he knew it was nude hikers day when he told them that?

Probably not.

As late as yesterday, Sanford's wife told CNN she hadn't heard from her husband. Sanford has four sons. He was away from his family over Father's Day weekend, shacked up with some tart in Argentina.

What a charming man.

Sanford announced that he's resigning as head of the Republican Governors Association. He was also once thought to be a contender for the 2012 presidential nomination.

These guys must have a death wish.

Governor Sanford is not what the Republican Party needs at this moment or ever. It's one thing to have an affair. A lot of people do that. But when you're the chief executive officer of the state, you cannot just disappear without telling anybody where you're going -- let alone leave the country for almost a week.

What if there was an emergency, Governor?

So here's the question: Should South Carolina Governor Mark Sanford be removed from office?

Go to CNN.com/caffertyfile and post a comment on my blog.

My guess is he's toast.

BLITZER: That's what you just heard Alex Castellanos, the Republican strategist, say, as well.

CAFFERTY: And Alex was the guy who broke the news yesterday that it was nude hiking day on the Appalachian Trail last Sunday.

BLITZER: Thanks.

CAFFERTY: Wasn't he?

BLITZER: Yes.

CAFFERTY: Yes.

BLITZER: Thanks very much. (LAUGHTER)

BLITZER: Breaking news -- more on the dramatic confession -- solves the mystery of the missing governor.

(BEGIN VIDEO CLIP, COURTESY SCE-TV)

GOV. MARK SANFORD (R), SOUTH CAROLINA: The bottom line is this -- I -- I've been unfaithful to my wife.

(END VIDEO CLIP)

BLITZER: As he fights back tears, the governor's wife is now speaking out. We're going to get her statement to you. That's coming up.

Also, President Obama takes back Fourth of July invitations to Iranian diplomats around the world. They're now uninvited to the U.S. embassy events. James Carville and Kevin Madden -- they're here with their take.

And plagued by a new scandal, Italy's prime minister raises eyebrows as he explains why he's never hired a prostitute.

(COMMERCIAL BREAK)

BLITZER: There's breaking news in South Carolina -- dramatic news. The governor, Mark Sanford, missing for several days, has just returned to work with this jaw-dropping explanation.

(BEGIN VIDEO CLIP, COURTESY SCE-TV)

SANFORD: I've been unfaithful to my wife. I developed a relationship with a -- what started as a dear, dear friend from Argentina. It began very innocently, as I suspect many of these things do, in just a casual e-mail back and forth; in advice on one's life there and advice here. But here, recently, over this last year, it developed into something much more than that.

(END VIDEO CLIP)

BLITZER: All right. Let's go to CNN's David Mattingly in South Carolina.

He's in the capital of Columbia right now -- we just got a statement and I'm going to read it to our viewers in a moment or two, David, from the wife of the governor -- a lengthy statement. Stand by for that. She explains where she stands in this very, very messy situation.

But tell us right now, he decided to resign as governor -- as chairman of the National Governors Association, but he is not resigning as governor of South Carolina.

DAVID MATTINGLY, CNN CORRESPONDENT: That's right. But there's a great deal of political damage that's been done by all of this. He's left the country, left the state, did not tell his staff exactly where he was going. In fact, he says that he told his staff that he thinks he might be going hiking on the Appalachian Trail.

And he was very clear. He put out another written statement later this afternoon, just clarifying that his staff was acting on the information that he gave them, that he said he was probably going camping or hiking on the Appalachian Trail.

Instead, he said that he was using that as sort of a cover for his trip to Argentina, where he went down to visit this woman with which he's been having an affair for the past year. He says he's seen her about three times over the last year. She's been a friend of his for about eight years, he says.

And now, he comes back to the state of South Carolina, surprised by all the attention that his absence was getting.

Several lawmakers very upset with the idea that the governor disappears without any -- any sort of contact information. His staff did not know exactly where he was or how to contact him. And there's a great deal of political fallout from that, because the governor is the only one who can order troops and things like that into emergency situations. So they felt that he left the state vulnerable by doing this -- Wolf.

BLITZER: And what about -- what about the whole notion of his political future?

MATTINGLY: He was once a name that was being bantered about as a possible GOP candidate for president this next time around. Ideologically, he ranks very high among Republicans. He was a man of strong personal faith. He was someone who was very much against big government and government spending. He said a lot of things that played very well to national Republicans, that did not win him many friends in the statehouse, however.

Because of his ideology about small government, he was butting heads with Republicans and Democrats while he was here. He had a very rough session this last time and told his staff that he needed to get away to clear his head after that rough session.

But, obviously, this is a man in very deep personal crisis, as well, in his personal life. So a lot of things that he had to work out.

BLITZER: I want to play for our viewers, David, this little clip of what he also said at the news conference.

(BEGIN VIDEO CLIP, COURTESY SCE-TV)

QUESTION: Did you intentionally -- did you intentionally mislead your staff about hiking the trail?

Did you intentionally mislead your staff about where you were?

QUESTION: Did you talk to them at any point when you were in Argentina, your staff?

SANFORD: Yes. In other words, they called -- I called them back on Monday and...

(CROSSTALK)

QUESTION: But when you left, did you intend...

SANFORD: No, no, no, no. We talked about that. In other words -- let me be clear. I said that was a reasonable possibility. But, again, that is my fault in -- in shrouding this larger trip. That's my fault. That's my fault.

QUESTION: Did you tell your staff to tell the press that you were hiking in the Appalachian Trail?

SANFORD: I -- I didn't tell them. I just said, hey, guys, this is where I think I'm going to go.

(END VIDEO CLIP)

BLITZER: The governor of South Carolina admitting he lied to his staff, who then gave false information out to the media.

We're just getting in this statement from the first lady of South Carolina, Jenny Sanford, the wife of the governor. And I'll read it in full, because it's the first time we've heard her react to his acknowledgments that he did cheat and had an affair.

"I would like to start," she says, "by saying I love my husband and I believe I have put forth every effort possible to be the best wife I can be during our almost 20 years of marriage. As well, for the last 15 years, my husband has been fully engaged in public service to the citizens and taxpayers of this state and I have faithfully supported him in those efforts to the best of my ability. I have been and remain proud of his accomplishments and his service to the state."

She goes on to say: "I personally believe that the greatest legacy I will leave behind in this world is not the job I held on Wall Street or the campaigns I managed for Mark or the work I have done as first lady or even the philanthropic activities in which I have been routinely engaged. Instead," she says, "the greatest legacy I will leave in this world is the character of the children I or we leave behind. It is for that reason that I deeply regret the recent actions of my husband, Mark, and their potential damage to our children."

She continues: "I believe wholeheartedly in the sanctity, dignity and importance of the institution of marriage. I believe that has been consistently reflected in my actions. When I found out about my husband's infidelity, I worked immediately to first seek reconciliation through forgiveness and then to work diligently to repair our marriage. We reached a point where I felt it was important to look my sons in the eyes and maintain my dignity, self-respect and my basic sense of right and wrong.

I therefore asked my husband to leave two weeks ago." She continues: "This trial separation was agreed to with the goal of ultimately strengthening our marriage. During the short separation, it was agreed that Mark would not contact us. I kept this separation quiet out of respect of his public office and reputation and in hopes of keeping our children from just this type of public exposure.

Because of the separation, I did not know where he was in the past week."

Jenny Sanford, the first lady, says this: "I believe enduring love is primarily a commitment and an act of will and for a marriage to be successful, that commitment must be reciprocal. I believe Mark has earned a chance to resurrect our marriage. Psalm 127 states that sons are a gift from the Lord and children are a reward from him.

I will continue to pour my energy into raising our sons to be honorable young men. I remain willing to forgive Mark completely for his indiscretions and to welcome him back in time, if he continues to work toward reconciliation with a true spirit of humility and repentance."

And she finishes up her statement with these words: "This is a very painful time for us and I would humbly request now that members of the media respect the privacy of my boys and me, as we struggle together to continue on with our lives and as I seek the wisdom of Solomon, the strength and patience of Job and the grace of God in helping to heal my family."

That statement from the first lady of South Carolina, Jenny Sanford.

We'll have more on this story coming up.

Also, reports from Iran of women beaten madly by government security forces.

Will the crackdown face Iranian women to back down and stop protesting?

And a horrifying scene, but a 4-year-old boy manages to walk away from this accident.

(COMMERCIAL BREAK)

BLITZER: Deborah Feyerick is monitoring some other important stories incoming into THE SITUATION ROOM right now -- Deb, what's going on?

DEBORAH FEYERICK, CNN ANCHOR: Well, Wolf, many college grads drowning in student debt will soon be getting a break. Starting July 1st, the government's new income-based repayment plan kicks in, lowering some graduates' loan payments. How high the payments will go depends on the person's income, family size and amount of outstanding debt. And the U.S. soccer team has pulled off a major upset. It beat top ranked Spain at the Confederations Cup in South Africa. The final score, 2-0. The Americans now head to their first Cup final, playing against the defending champs, Brazil or South Africa. The Confederations Cup is a warm-up for the World Cup.

And a frightening near miss caught on tape. Take a look. A car in Turkey goes out of control and hits that 4-year-old boy. The boy is knocked down a flight of stairs, but isn't seriously hurt. The car eventually crashed into a store front. The driver says he lost control after swerving to avoid a puppy.

And Hollywood's biggest night is about to get even bigger. The Academy Awards will double the number of best picture nominees from five to 10. Oscar officials say they're boosting the number of nominees to allow more worthy films to compete. The change goes into effect for next year's show, scheduled for March 7th, which means we'll be going to bed a lot later than normal -- Wolf.

BLITZER: You're probably right.

All right. Thanks very much for that, Deb.

To our viewers, you're in THE SITUATION ROOM.

Happening now, an Iranian -- as Iranian protesters leak out more images of a brutal government crackdown, the Iranian government is airing so-called confessions of protesters -- taped testimonials of people allegedly claiming they were influenced by Western media.

New video of that deadly rail crash in Washington -- we're going to show you those dramatic pictures taken trackside right after the accident -- a tragedy that's raising serious concerns about the safety of aging transit trains around the country.

Italy's prime minister goes on the offense over allegations he paid for prostitutes. He insists he didn't do it. But just wait to hear his rationale.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

But first, let's get back to our top story, the breaking news from Iran. Government forces sweeping down on demonstrators near the parliament building today. Witnesses describe people beaten, including women beaten like animals and blood everywhere. That's what they say.

Our Iran Desk is monitoring the breaking news for us through iReports, Facebook and Twitter.

Meanwhile, we want to bring back Rudi Bahktiar, a former CNN anchor, now with the Public Affairs Alliance of Iranian-Americans here in Washington and Sir Richard Dalton, the former British ambassador to Iran. Thanks to both of you for coming in.

And, Mr. Ambassador, Sir Richard, let me start with you.

You spent, what, four years in Iran. When you see these "confessions" on Iranian state television, people saying the BBC made me do it, the Voice of America made me do it, what goes through your mind?

SIR RICHARD DALTON, FORMER BRITISH AMBASSADOR TO IRAN: Well, I don't believe that the Voice of America or the BBC made them do it. There's no shred of evidence that objective news precipitates action by individuals. Certainly, what happens in Iran is influenced much more by what is happening in families, amongst groups of people who know each other on the streets.

BLITZER: You lived there for your years.

How brutal, potentially, is this regime -- the leadership there?

DALTON: Well, they're determined to take whatever action is necessary to damp down the fire which they lit when they declared so rapidly after the elections the result that we now know about.

It was to be expected, too, that once the leader of Iran had pronounced that they would take every step necessary, in their eyes -- including a brutal crackdown on the streets -- if people didn't heed the earlier advice, the strong advice, that they should accept the results.

BLITZER: Will these guys succeed?

DALTON: I believe in the short-term, peace is going to be restored on the streets, but how long it will last is an open question. And that reflects in part the uncertainty that we have about what is happening in the Iranian leadership itself; what the debates are, what the camps are within the principalist (ph) movement and what the opposition candidates themselves will do.

But at present, the best guess one can make is that the leader of Iran and the faction that supports Ahmadinejad have got the power to insure that Ahmadinejad is inaugurated.

BLITZER: Do you believe, Rudi, they will succeed?

RUDI BAKHTIAR, PUBLIC AFFAIRS ALLIANCE OF IRANIAN AMERICANS: I believe for now, yes. You know, the women and men of Iran are having a very hard time against these brutal forces that are coming out and just murdering people. All reports that I'm hearing from inside the country are horrific.

And I have to tell you, Wolf that I have several people that I was talking to, two of them that I have not heard from in several days and the other two won't even pick up the phone. One e-mailed me and said please don't call us. And they also tell us that they're in a complete blackout. They're getting no information from the outside world except for what they can get through the Internet. And they are being, as you just -- you just showed, they are being told by people who are under duress, making confessions, that -- untruths.

BLITZER: So, basically what we see happening is the intimidation, the fear is forcing the demonstrators, the opposition to retreat and stay inside.

BAKHTIAR: And this reminds me very much of what happened with the '79 revolution in Iran. You know, it took over a year to happen. The violence started back in January of '78, even before that actually and it grew to the strikes that happened in August of '78 and then we saw the actual revolution in February of '79.

BLITZER: You spent four years there...

BAKHTIAR: I did.

BLITZER: ...studying this regime. And you got to know several of them in your capacity as a British Ambassador in London. You look at the Supreme Leader, the Ayatollah Khamenei. How does he view what's going on? What's going through his mind?

DALTON: He wants to preserve the Islamic Revolution and he wants to preserve his authority. And he has a vision for the future of the country which does not include the kind of reform which was advocated by President Khatami when he was in power and does not include the kinds of changes to Iranian policy which President Mousavi, if he had been successful, might have introduced.

But it's chiefly a struggle for the soul of the revolution and who is going to run it and in what direction. He made up his mind a long time ago, I believe, that what the right direction for Iran was and he is determined to enforce that.

BLITZER: And he hates Mousavi.

DALTON: I wouldn't say that. He has had a difficult relationship with him when Mousavi was Prime Minister back in the 1980s. I'm sure he profoundly disagrees with him. Maybe he hates outside powers who he alleges are behind some of the actions in the streets, but this is not the first time that the leadership in Iran is being severely divided...

BLITZER: But if I ask the question, Rudi, specifically, how worried should Mousavi be right now about his own security, his own safety?

BAKHTIAR: Well, if I were him, I'd be very worried. You know, the Islamic regime has had a very iron fist on the Iranian people. And people who speak out against the government are often arrested and they are sometimes killed, whether they're inside the country or out, depending on how effective they are.

And we haven't heard from him in a few days, so I would be deeply concerned about his safety.

BLITZER: They're arresting a lot of family members of those who are supporting the opposition, including family members of Rafsanjani and others; some of the founding fathers of this 30-year-old revolution there. It's pretty amazing what's going on.

DALTON: I don't think it's surprising that the campaign of arrests should continue. There were many, if you remember, immediately after the election result was announced and when the first protests appeared. Many of those were released. But they didn't succeed in those early attempts and they're going to have to continue.

BLITZER: When you see these forced confessions, so-called forced confessions on Iranian state television, people saying the United States, or the British government -- they made me do it, what do you think? Are these legitimate or what?

DALTON: No, they're not legitimate. Iran has been responsible for its own fate for decades. Foreign powers with diplomatic relations like my country respect the choices of the Iranian people and believe that it's for the Iranian people themselves to decide how they should be ruled.

BLITZER: But are they saying to these people, if you don't say what we want, we're going to arrest or take away your children or your family? Do you believe that?

DALTON: I believe that they will take whatever action is necessary to damp down over protests. They can't control what's in people's minds and they can't necessarily control all manifestations of defense in the long term, but they want President Ahmadinejad to be inaugurated in an atmosphere of calm.

BLITZER: Do you believe that the President of the United States is doing a good job on this issue right now?

BAKHTIAR: This is such a delicate issue, Wolf and I believe that the President has struck exactly the right tone, because everything we hear from inside of Iran is that any indication that the United States is helping the movement there weakens it.

And so, it is a delicate balance, because you do see these horrific images coming out and you see people day after day showing their courage and trying to stand up for what they believe in. But, again, there's more damage done if he does take a stronger position.

BLITZER: Rudi Bakhtiar, thanks for coming back and Sir Richard Dalton, the former British Ambassador to Iran, thanks to you, as well.

DALTON: Thank you.

BLITZER: President Obama is taking back his invitation to Iranian diplomats to join American diplomats in Fourth of July parties at U.S. Embassies around the world. James Carville and Kevin Madden are both standing by to talk about that and more. Plus, the American journalist imprisoned by Iran is now speaking up. Roxana Saberi is safe; she fears protesters in Iran maybe tortured.

(COMMERCIAL BREAK)

BLITZER: Let's bring in our Democratic strategist and CNN political contributor James Carville and Republican strategist Kevin Madden. What a political story.

Today the breaking news out of South Carolina that the Governor Mark Sanford, has acknowledged he went to Argentina -- he didn't got to the Appalachian Trail, after all -- and had an affair. Listen to what he said.

(BEGIN VIDEO CLIP)

SANFORD: I've been unfaithful to my wife. I developed a relationship with a -- which started as a dear, dear friend from Argentina.

It began very innocently, as I suspect many of these things do, in just a casual e-mail back and forth, in advice on one's life there and advice here. But here recently over this last year developed into something much more than that.

(END VIDEO CLIP)

BLITZER: What do you think, Kevin? Is it over for him?

MADDEN: Well, I think that if you're looking -- if you mean by political career, I think that ought to be secondary. I think that the way that someone like Mark Sanford repairs his political career right now is to put that second and put repairing his family and his personal life first. And I think that's -- if you look at the statement that his wife just released earlier, I think that's the focus right now. And that's where it ought to be, quite frankly.

BLITZER: Because his wife, James, just issued a lengthy statement which we read on the air saying she's willing to give it another shot, willing to try at reconciliation.

CARVILLE: Well, I mean, look, they have four young children and then, you know, people should forgive. I mean, that's what this is does. One thing we now can all agree on and we move on, we don't need any more moralizing or pontificating or what will we tell the children, and add more garbage in American life. We're all human beings.

No one political party or political persuasion has any moral authority to lecture another one. And that's the good that will come out of this.

The other thing is it's just -- I don't think he should resign. I mean, David Vitter didn't resign from the Senate. I have no idea why he should resign as the governor of South Carolina. I'm not a psychiatrist, but looking at this man today, he'd looked liked -- I guess anybody would be under the circumstances -- he looked pretty emotionally spent to me. I don't know what kind of mental state that Governor Sanford is in.

BLITZER: He's under enormous pressure, obviously. The reason some say he should resign, Kevin, is this time line that the state, the leading newspaper of Columbia, South Carolina, put out.

He leaves the governor's mansion on Thursday. On Friday, there's no response from the governor to phone and text messages. On Saturday, the governor's office reports no reason for concern. On Monday, the governor's office says Sanford is actually hiking on the Appalachian Trail.

And today, Wednesday, he arrives in the Atlanta airport, a photographer finds him there, and he says later in the day he was in Argentina and he had an affair.

Is that responsible for a governor of a state to simply disappear like that, go AWOL, as the newspapers say, and -- because of this?

MADDEN: No, it's absolutely not responsible. It's quite irresponsible. There's a number of misleading statements. I think, that the governor is doing the right thing by saying, by apologizing to his staff and apologizing to the people of South Carolina for having misled both.

And now I think it's up to the people of South Carolina, it's up to the legislature on whether or not they're going to decide on whether they should proceed with -- and whether those kind of actions warrant some impeachment proceedings. I don't know if they do.

But ultimately, he has to make a case to the people of South Carolina, his constituents, that he's still worthy to hold that office. A public office ought to have a higher standard.

I think when you take that oath to represent the people that you have to be held to a higher standard. And I think he readily accepts that and the charge he has right now is to go forward and try and convince the people that he can continue to do that.

CARVILLE: I'm not -- I'm not with Kevin. Why does David Vitter keep his job? Why does John Ensign keep his job? Why does Larry Craig keep his job? Why did Eliot Spitzer have to resign and these people didn't?

CARVILLE: Ok. I'm sorry. Human weakness is just something -- or these kinds of things are something we all sort of have.

My only question about his continuing performance in all this is, you know, I know if something like that happened to me I wouldn't want to concentrate on being governor. I can't imagine what that flight was like back from Buenos Aires, for one. But he seemed to me to be pretty emotionally wrung out here.

BLITZER: Which is totally understandable...

MADDEN: Just to be clear, I don't think he should resign, James.

CARVILLE: Oh, ok.

MADDEN: What I'm saying is I think he publicly accepts that those actions were not right and that he apologized to the people of South Carolina.

BLITZER: He did resign as chairman of the Republican Governor's Association. Haley Barbour, the governor of Mississippi, is now chairman of that group. But he's not resigning, at least not yet, as governor of South Carolina.

Let's say he called you and said, "James Carville, you're a smart political strategist, I need some advice. How do I salvage my political career?"

CARVILLE: You know, people believe in redemption. And, you know, I'd say, "Governor, first of all, you can even get Kevin and I to work on it together." Kevin would agree it's not going to be solved within a year or two. But people want a happy ending. You have those four children and you are governor and you work on it -- and people forgive. People have a great capacity for forgiveness, and the American people do and I suspect the people of South Carolina do, too.

But he's got a -- as I said, pool holes have a lot of green between here and there.

MADDEN: James is right. I think accepting the consequences of his actions right now is doing the right thing. But first is going back, and if you repair yourself personally, you take care of your personal life and put politics second. I think that people do an enormous capacity for forgiveness.

BLITZER: Guys, we'll leave it on that note. Thanks very much to both of you.

Dramatic new pictures of that deadly rail crash here in Washington, D.C. We're going to show you the video taken trackside shortly after the accident.

As investigators try to zero in on the cause of the crash, there are now new concerns about the safety of transit systems, not only here in Washington but across the country.

And Italy's prime minister denies allegations he paid for prostitutes but his rationale is raising eyebrows around the world.

Stay with us here on THE SITUATION ROOM.

(COMMERCIAL BREAK) BLITZER: Investigators in Washington, D.C., say they found what they call an anomaly in the control circuit of a track where a transit train crashed into another on Monday killing nine people. The investigation's also focusing in on the train brakes and the system's computerized emergency system, which is supposed to kick in when trains get too close to each other.

You're looking, by the way, at just released video of that tragic accident. These pictures were shot right after the deadly crash; an accident that's raising serious safety concerns, not only here but around the country.

Let's bring in CNN's Jeanne Meserve who's been investigating this for us. What's the biggest concern, Jeanne, right now.

JEANNE MESERVE, CNN CORRESPONDENT: Well, there are a lot of concerns right now but one of the things that people are talking about is the fact that those who that died in the Metro crash were in an older, less crash-worthy type of rail car. And yet Metro's fleet is younger than those found in a lot of other cities.

(BEGIN VIDEOTAPE)

MESERVE (voice-ever): Americans ride mass transit 35 million times every weekday. The systems they ride are getting older. A recent study says one-third of the largest systems operate in marginal or poor conditions with aging assets like rail cars.

VIRGINIA MILLER, AMERICAN PUBLIC TRANSPORTATION ASSOCIATION: Public transportations need -- capital needs came to approximately $60 billion a year. When you look at federal, state, and local funding for our capital needs, it only comes to $14 billion.

MESERVE: In this week's D.C. Metro crash, all the fatalities were in the first car of the striking train built in the 1970s.

In a 2004 crash, the same model car crumbled like an accordion. And the Washington Metropolitan Transit Authority was warned.

DEBORAH HERSMAN, NTSB: We recommended to WMTA to either retrofit those cars or to phase them out of the fleet. They have not been able to do that.

MESERVE: Metro has 296 older cars in its fleet. It would cost the financially-strapped transit agency about $900 million to replace them and it would take three to five years.

But there is another issue.

JIM GRAHAM, METRO CHAIRMAN: The fact of the matter is that there are no standards in place for crashworthiness of transit cars. This is a great omission.

MESERVE: The NTSB can only make safety recommendations. And even the Federal Transit Administration does not have legal authority to set rules or standards for transit system railcar crashworthiness. An industry group, the American Public Transportation Association, has established standards but they are voluntary and only for new cars.

(END VIDEOTAPE)

MESERVE: Investigators don't yet know the speed of the striking train in the Metro crash but there is speculation that it was going so fast, even the most crash-worthy car constructed could not have protected the people inside -- Wolf.

BLITZER: Really chilling story. Thanks very much for that.

Let's go to Jack Cafferty right now for "The Cafferty File."

CAFFERTY: The question this hour: Should South Carolina Governor Mark Sanford be removed from office?

David in Texas: "Yes, but not for his affair; for allowing the people of South Carolina not to have a chief executive to turn to. What if there had been a natural disaster, a riot in the streets or explosion at a factory. He would be removed as CEO of a major corporation by the board of directors and he should be removed by the South Carolina legislature."

Sylvia in Tampa: "Yes, as should have David Vitter, John Ensign and Larry Craig. They all say they are sorry and that's supposed to be the end of it. The Senate Republicans applauded John Ensign yesterday. What's wrong with this picture? Since there appears to be no consequence for this deplorable behavior it continues. It's disgusting?"

Shirley in Alabama: "Governor Mark Sanford is a dirty, dirty man; he should have been booted out long ago. Not just because he cheated on his wife but mainly because he is cheating the people of South Carolina. Where do they find them and why do these southern states that are poorer than dirt keep electing these Republicans that keep them poor. He's pathetic."

Eis writes: "Here's yet another hypocrite who casts stones at others while running to South America to have an affair. I'm not surprised. He was in Congress during the Clinton impeachment over an affair. At least he wasn't caught in the bathroom at the Ezeiza Airport in Argentina."

Sharon writes: He essentially abandoned the state that elected him governor to diddle some woman in Argentina, leaving no one -- not his staff, his wife, no one -- knowing how to reach him. He should scrape the bottom of the barrel, see if he can find a shred of integrity and resign."

And Brian in Connecticut writes: "Jack, leave him where he is in the spotlight as the latest of those supposedly religious, supposedly moral, supposedly family value-oriented wealthy men, who don't give a damn about the people they supposedly represent."

If you didn't see your e-mail, you can go to my blog, cnn.com/caffertyfile.

We have some pretty funny e-mails, Wolf. Some of them not fit for family television but you can read them on the blog.

BLITZER: I'm sure. But I'm going to read it. Jack, thank you.

A new scandal is swirling around Italy's prime minister. He denies hiring prostitutes and he uses a very unusual explanation.

"I have never paid a woman," he said in the interview. "I never understood what the satisfaction is when you are missing the pleasure of conquest."

Another day, another scandal for Italy's embattled prime minister. It all started when his wife of 19 years, Veronica Lario, filed for divorce last month accusing him of consorting with minors; allegations that made news far beyond Italy's borders.

But then came Spain's "El Pais" newspaper, publishing pictures of nearly nude women allegedly attending a party at one of Berlusconi's Sardinian villas. Though Berlusconi, himself, was no in the photos. The prime minister successfully sued for invasion of privacy. The photos are now banned from publication in Italy.

In a recent interview with CNN, Berlusconi dismissed the scandal as a political plot.

SILVIO BERLUSCONI, PRIME MINISTER, ITALY (through translator): In the face of an accusation of this nature, I will react. I will explain exactly what the situation is. I will still have the Italians on my side. Once again, this accusation will act as a boomerang against the people that have started it.

SHUBERT: Now the prime minister faces allegations from Patricia d'Addario, that she and several other women were each paid to visit the prime minister's home. And she says, she has got these photos taken in Berlusconi's house and a recorded conversation to prove it.

Throughout the scandal, Berlusconi has maintained high approval ratings. But is this one step too far for Italy's notorious prime minister?

This woman says, "As an Italian, I am ashamed. I believe that he should resign right away."

"It's a further indignity for those who didn't vote for him," this person says. "But it has only increased his popularity among his followers."

A messy divorce and naked pictures, that might be enough in some countries to force leaders to resign but not, it seems, in Italy.

(END VIDEOTAPE)

SHUBERT: Police are now investigating the statements from Patricia D'Addario -- Wolf.

BLITZER: Atika, thank you.

And happening now, protesters in Iran beaten, quote, "like animals" -- a bloody new explosion of unrest and violence. We are keeping you up to the minute on this breaking news story.

On Iranian TV, alleged confessions by protesters. How far did the government go to get them? Fear and blame unfolding right now.

Plus, the mystery is now solved and the scandal begins. South Carolina's governor reveals the reason he disappeared for days. He's been having an affair. And now Mark Sanford's wife is speaking out.